8% Rule Is Triggered: How I’m Adjusting 2 Positions

Many readers are aware of my 8% rule. Some newer readers have asked about panic points and that rule. Now, followers of the $10,000 Portfolio will see how I handle this specific discipline in real time.

The deal is this. It stems from a trade gone wrong way back during the days of the dot-com bubble, or rather the bursting of that bubble. The nearly 100% loss of principle on a long position in internet incubator CMGI ultimately led to my working for myself so I could set the rules. That event also led to my creating a set of disciplines that I could live with and in a perfect world, prosper by.

The bottom line is that unless the loss happens while I am sleeping, I have promised myself never to take a loss of 8% or more without taking action of some kind. Readers should be aware that I do exempt lower-priced stocks from the rule. That’s why long-term readers who focused upon the old “Stocks Under $10 Portfolio” and transitioned to the $10K Portfolio may not have ever had to deal with this rule in the past, unless they also tracked other moves of mine that impacted the broader “Sarge-folio.”

What’s Going On?

Despite the fact that the $10K Portfolio is indeed in the green since its inception in March, we have two stocks that are now in violation of my 8% rule based on when this portfolio, not the broader Sarge-folio, entered into those positions. It gets a little confusing as I often have to keep more than one average point of entry, but this is an educational portfolio. Hence, I would be remiss in fulfilling my responsibilities to you, my readers, if I did not make an earnest attempt to show newer or less comfortable investors how professional managers go about their business.

Now, panic points do not automatically cause a fire sale. They are a call to action. This portfolio is now down roughly 17% on Planet Labs (PL). I have already been adding to this long and will add again as I have a fairly high level of conviction in the name.

Meanwhile, Palantir Technologies (PLTR) is an old darling of ours as our $8 entry point made this portfolio’s predecessor the legend it became. That position, gasp, is now down 8% and I intend to create some cash without exiting the name completely.

Thursday’s Intentions vs. Thursday’s Actual Trades

– Purchase 10 shares of SWBI at $16.25 or better.
– Bought 10 shares of SWBI at $16.25.

– Purchase 10 shares of SWBI at $16.00 or better.
– Bought 10 shares of SWBI at $16.00.

Monday’s Intentions

– Sell 4 shares of PLTR at $126 or better.

– Buy 5 shares of PL at $28 or better.

Current Positions

Long 125 shares of ALTO at $5.635. Target Price: $9. Last sale: $5.08.

Long 3 shares of AMZN at $258.0567. Target Price: $324. Last sale: $242.78.

Long 60 shares of EVLV at $5.9895. Target Price: $8.50. Last sale: $5.74.

Long 200 shares of OCUL at $8.271. Target Price: $11. Last sale: $9.45.

Short one OCUL $11 Sep 18th call at $1.65, Last sale: $1.42.

Short one OCUL $9 July 17th call at $0.90. Last sale: $1.20.

Long 150 shares of ONDS at $9.7624. Target Price: $14. Last sale: $9.05.

Long 20 shares of PL at $32.865. Target Price $55. Last sale: $27.51.

Long 10 shares of PLTR at $137.906. Target Price: $194. Last sale: $126.60.

Long 8 shares of RKLB at $77.9288. Target Price: $185. Last sale: $105.00.

Long 35 shares of RXT at $6.4529. Target Price: $9. Last sale: $7.29.

Long 150 shares of SIDU at $3.0909. Target Price: $6. Last sale: $3.19.

Long 135 shares of SOFI at $15.8617. Target Price: $24. Last sale: $17.71.

Short one SOFI August 21st $20 call at $1.02. Last sale: $1.20.

Long 20 shares of SWBI at $16.125. Target Price: $19. Last sale: $16.34.

Long 35 shares of VELO at $12.3231. Target Price: $36. Last sale: $29.62.

Cash: $77.13.

Portfolio Value: $11,848.95, +18.5% from inception on March 24th.

At the time of publication, Guilfoyle had positions in ALTO, AMZN, EVLV, OCUL, ONDS, PL, PLTR, RKLB, RXT, SIDU, SOFI and VELO.